Last week, the stigma of “sales” was confirmed to be alive and well to my dismay. Of 150 new postgraduates, only a couple would admit to having considered a career in sales. To a certain audience, “sales” is not “cool” or for the matter worthy of “academic attention.” And yet at the crux of any business, if there are no sales, there is no business.

My interest in sales education really started following my experience in Educational Multimedia Group in the late nineties and early noughties. I was then and remain now convinced that sales can be studied academically and indeed is worthy of such study. On joining DCU Business School, I retained this interest and began looking at the area in more detail. At that time, GrowingCo had just surveyed 218 executives in the Chicago area. They found:

38% of mid-market organizations (defined as having greater than $2.5 million in annual revenues) lack internal agreement on the role of marketing

85% of sales forces have never been exposed to their companies’ marketing strategy or marketing plans.

The survey emphasised the negative impact of poor coordination of sales and marketing activities and to some degree highlighted the difference between the functions. Marketing and sales are intrinsically linked and the success of a sales effort is impacted heavily by the marketing effort – therefore incentives should be aligned. Interestingly in other surveys on sales management perception, one finds that senior management typically view their sales team performance as less than perfect. In Forum Corporation’s survey of 111 senior sales executives in 96 major corporations across 17 industries around the world, the average grade was 7 out of 10 or a C- in this context (although this could be a first class honours in Ireland!). Superior sales forces had no single differentiator – they performed better across the full spectrum of management, process and skills. A 2004 Accenture survey found 56% of 178 executives saw their salesforce performance as average, worse than normal or catastrophic.

Soon after, in 2006, the Harvard Business Review published a special double issue on “Sales” which served to highlight the dearth of academic research and highlight the area of sales management. This is not the first time academia has sought to highlight this problem, but merely the most high profile. As far back as 1979, the enigma of the study of sales management was recognised – selling costs account for the largest share of marketing expenditure and yet is one of the weakest areas of academic research (Bagozzi, 1979).

Things have not changed much. You rarely find robust dedicated modules let alone programmes on sales or sales strategy in business schools. And I would be surprised where such modules are delivered, faculty either deliver them or if they do, have any real practical and sustained experience in selling at an operational or more importantly a strategic level. Donaldson (1998) summarises the problems of studying sales management as

Traditionally, the emphasis in sales management is on implementation and tactical operations rather than strategic planning and policy, which has been the prerogative of marketing.

The difficulty of isolating the sales response function and its causes. Many factors other than selling effort affect sales response.

A myopic view that behavioural relationships and interactions in selling are not amenable to classification or variables are impossible to measure.

Many principles of sales organisation, deployment and motivation are based on “how to “ principles, some of which are difficult to assess or understand, for example how to overcome objections. Much of the data are highly specific and anecdotal.

The terrain on which operations take place is continually changing (territories, personnel, customers).

Much of the input on sales management issues comes from disparate areas of research, behavioural sciences, operations research and economics.

Much study and evidence is US-based and these findings in empricial research do not remain intact across the Atlantic.

In fairness to HBR, since 2006 they have published on the subject regularly however has the wider business education system followed this lead? Do primary and secondary schools encourage students to pursue a career in sales? If they do, what university programmes can they take? Is there now an abundance of postgraduate Masters programmes for the sales leader? Unfortunately not.

While few business postgraduates, and specifically MBAs, might value a sales position as their post-MBA career entry point, in practice, good CEOs place an emphasis on spending time in the field with the sales force, view sales teams as strategic resources and understand that sales is critical to their personal career and their organisation’s success. Sales literally is where the money is…..but marketing sounds better to postgrads and….parents.

A couple of years ago, one of my postgrads and I surveyed a small group of students and sales professionals on their perceptions of sales as a career choice. Unsurprisingly, sales was not the most attractive career but for those interested, it was seen as a career that was potentially well paid and where earnings were very related to effort. Yes for sales professionals, one of the main reasons for the choice of a career in sales was that it didn’t require one to work weekends. Pay and control (whether related to effort or creativity) remained important but flexibility more so. These are probably not career attributes we “sell” in school or as parents for our future workforce.

Let’s face facts – it can be a brutal job. It is probably the most accountable job there is – you literally cannot hide from the numbers. Are we developing a generation of business graduates afraid of such brutal accountability?

In today’s post-growth economy, sales should be a huge focus. However, the investment in sales versus other market supports seems comparatively small. In many of the business networks, there are often experienced accounting professionals offering advice to SMEs to control costs and management cashflow, and this is very important, but there are few experienced sales professionals offering advice on how to grow sales. And they’re not in academia either. And maybe this is the problem.

We need vision not just in R&D-based innovation but across all organisational processes. We want Ireland to be centre for excellence in bio-tech, ICT, financial services and many other sectors. Who is going to sell these products and services?Sales generates taxes. Ireland could be a global centre for excellence in sales. If we aren’t going to be, someone else will. And that will be to our detriment.

PS – we now do deliver strategic sales workshops and personal selling modules in DCU Business School covering areas such as channel selection, sales models and process, tendering, selling tools, sales competencies, staff selection and sales team structure, rewards and incentive design etc etc. These are delivered by the Marketing Group.

The topic was a curious one. As Laurent and I discussed it over dinner last Wednesday, it became apparent that much of what we know refer to as internet business models are influenced by concepts previously applied in the strategy domain – network effects (see Eisenmann et al for strategies for two sided networks), lock-in, switching costs, long tail (power laws), cost leadership, differentiation (and by extension, the economics domain) etc. As we discussed various perspectives and articles, it became apparent the line between internet business models and strategy is increasingly blurry. Should we define internet business models in the context of how a business creates, captures and delivers value or how it generates profits (implying revenue generation and cost management)? The former would seem to bleed in to strategy – after all many companies have the same business model but achieve different levels of success. I left Laurent’s apartment, very late, with my mind in flux to what I should present.

Luckily, Paris is the ideal place for burning the midnight oil…literally. I reviewed some old presentations and articles and found that many of the articles Laurent and I had discussed, although recent in academic terms, were clearly out of date already – they did not foresee the rapid rise and adoption of social networking and the increasing ubiquity of computing, bandwidth and storage. It is easy to forget that Google and Facebook are still relatively recent phenomena. However, the business models hadn’t changed as fundamental in the last 2-3 years as I had first thought – it was more that the adoptions weightings had. The core Internet models are still – transaction, subscription and subsidy models and you can find them everywhere and in particular in the content sector e.g. videogames (gamestop, world of warcraft, farmville) and music (iTunes, Spotify, GrooveShark).

Transactions are still the bread and butter of many of the big players – eBay, Amazon, iTunes although there are new flavours e.g. Groupon. As well as network effects, it seems to me innovation in transaction models over the last couple of years has related to assurance models. Central to eBay is its rating system and trust network which provides assurance on the provenance of merchants; to some extent PayPal provides assurance for both merchants and buyers on transactions. iTunes provides a technological assurance through FairPlay by limiting use of tracks on defined number of devices. Groupon provides a broker-based assurance by making sure merchants honour deals provided the minimum threshold is achieved. Interesting, microtransactions (where transactions are measured in cents not dollars) still have not caught on; although one might argue iTunes and indeed AdWords and other advertising transactions epitomise this model.

Salesforce.com remains the poster boy of enterprise subscription models, and in particular Software as a Service. Its achievement in reaching over $1bn in revenues is to be lauded. There is no doubt their business model is a benchmark for now and the future but for whom. Salesforce’ customer base is very specific – salespeople and their support staff turn over regularly, often work at home or on the road, need up to date data at all times etc etc. Employees in HR or Accouniting do not have the same profile. Nonetheless, many companies are trying to adapt their traditional packaged software model to SaaS. Earlier in the summer, IDC forecast that less than 15 percent of net-new software firms coming to market would ship a packaged CD product and by 2014, about 34 percent of all new business software purchases would be delivered via SaaS, representing 14.5% of worldwide software spending. But the licensed/packaged software market hasn’t gone away – its still worth $300bn+ and many large and small companies alike are still uncomfortable with cloud based services. Why? Well, the larger software companies are still making a lot of money from packaged products and the transition to cloud based subscriptions has to be managed carefully. Subscription models get rid of the need for built-in obsolescence but also change the focus from repeat orders and upgrades to managing churn (or reducing non-renewal rates). They also reduce upfront licensing fees, customisation and service level fees as the customers move from a perpetual to a time-based subscription model. A wholesale change from packaged perpetual software licenses to annual subscriptions would reduce short-term revenues per customer. Lower revenues impacts earnings; earnings impact share price. SaaS means a lot of change from being product-focussed to customer-focussed, short-term revenues to long-term revenues, average revenue per customer to average revenue per user etc etc. But SaaS isn’t the only subscription derivative – e-learning companies have used rental models before Internet Delivery (see SkillSoft nee Smartforce nee CBT Group) and Netflix is doing an admirable job with DVDs. People tend to forget that their mobile service, their digital TV service and many other services using digital networks are “Internet” business models.

For me, subsidy-based models are the most interesting. Advertising dominates this class of business model. This remains primarily a B2C model – there is little evidence of enterprise acceptance of advertising-backed software and there remains policy issues in relation to advertising/sponsorship based models for education and other public sector sales. However, for those with the time, financial and technical resources, it is possible to fund your business with advertising. I, personally, also think this is a perfectly acceptable way to fund access to software particularly where no other funding is available e.g. in developing countries. However, selling advertising services (such as Facebook Ads and Google Adwords) is different than funding your business through advertising. But advertising isn’t the only form of subsidy – in the public sector, government subsidises commercial software – and in the NGO sector, foundations, governments and other agencies subsidise various initiatives including open education resources etc. It should be noted a few years ago, we assumed that there would be consolidation in digital advertising platforms and thus advertising-supported business models and choice would be less complex. The rapid adoption of social networking sites and services has fragmented – Facebook ads, LinkedIn Direct Ads and others compete with Microsoft Bing Advertising, Yahoo Advertising, and Google Adwords for advertising dollars while Twitter and others generate traffic for free. Selecting your advertising platform is getting more complicated but managing campaigns is more complex still. The number of Internet businesses that can generate enough traffic to sustain a business of any scale remains limited. This does not mean it is not happening, sites like Grooveshark, seem to be making advertising-funded services work for the music sector.

So how do you pick one? It largely depends on your market and how they perceive key elements of any given business model and again these lie in conventional business academic literature – elasticity, price, awareness, customer type etc. For example, enterprise customers know and understand transaction and licensing-based business models – they are familiar, they know the conditions, the quality and service expectations, and know the procurement dance (discounts for user volume, end of month and end of quarter pressure etc) and they control their data and uptime. They are comfortable with doing business this way. Businesses providing software funded by advertising introduce more questions than answers for enterprise buyers – will the advertising be appropriate? will it distract employees? what are the conditions and level of support (if it is “free”)? Individual users are happy to deal with this ambiguity, enterprise customers are not. Subscription-based models and in particular, the SaaS model play the middle ground. It can be argued that enterprise customers (and individuals) get enterprise software at lower cost, better service, less technical headaches with terms, conditions and procurement process that they know. They get a lot; they need to just give some trust….not the easiest thing to do even at the best of times.

Can you blend them? Yes, and this can be a source of competitive advantage. Microsoft have blended different models in their games business. You effectively license an XBOX and can then buy or subscribe to software through XBOX-Live Marketplace etc. There are free games too. Similarly I note Spotify allows you access some services with ads, a no-ads subscription service and a service where you can purchase MP3s for download and use outside of Spotify. Indeed, the Spotify model, may in time, challenge iTunes and be adopted by other media creators and aggregators; it provides a straightforward framework that addresses all consumer preferences. But this depends on their capacity to negotiate with the media rights owners worldwide (and not territory by territory) and defend against Apple at the same time.

So where does strategy come in to it? Well you can replicate any business model but this does not business success make. You still have to find a way of satisfying unfulfilled (or unknown) needs of a given market segment better than the incumbents, profitably and ideally uniquely. And that is the trick – profitably and uniquely. Whether it is one, two or each of operational effectiveness, customer targeting or innovation, successful companies have to do something better than the competition. With Internet business models, the same rules of marketing, economics, finance and strategy largely apply – segmentation, targeting, differentiation etc, etc, etc, but the successful companies move fast and tweak continuously and that is critical. They tweak digital rights management, delivery efficiency, payment options, payment process etc. The more things are different, the more they stay the same….just accelerated and more-and-more slightly left of centre.

Oh yeah, what about “free” business models? They don’t truly exist – someone has to pay.

A View From Above - some of the poster displays at DCU Business School's Practicum Day 2010

A practicum is an assignment designed to give students supervised practical application of previously studied theory. In DCU Business School, we offer MBS in Marketing and MSc in Business Management students the choice of undertaking a individual dissertation, which is largely an academic piece of research, or a group practicum. We source practicums from a wide range of organisations, business and not-for-profit, and initial ideas for projects are presented to students via Moodle in February. The students make proposals for these projects and start working on them in March. A report of work completed is submitted at the end of July. Later in August, student groups present their project for 25 minutes to two assessors who then question them on their project. Feedback is provided on this interview and students then present their “research poster” and present and answer questions from an audience of peers, faculty and other guests for 10-15 minutes.

Tiernan Kennedy presenting his group's work on the use of digital marketing for international student recruitment for DCU Language Services at DCU Business School Practicum Day 2010.

This year 22 groups presented their projects, which fell in to four main themes:

Original business plans – business ideas that students have identified, research and prepared business plans for.

The Perigord Team fielding questions at the DCU Business School Practicum Day

Overall the day was very enjoyable and interesting. It gave students both the opportunity to (i) clarify issues raised or unaddressed from their report and interview and to (ii) see and appreciate the efforts of their peers. As well as students, guests including faculty, industry, other members of the University, incoming students and parents attended. All were impressed with the quality and volume of work. Unlike dissertations, students have the opportunity to address a real-world problem with a live client or indeed pursue their own business idea.

The Foodies' Edu-plate Nutritional Learning Toy

As every business and context was different, approaches and projects varied dramatically and really brought individual competences to the fore including ideation, industrial design and digital marketing skills. The DCU Business School Practicum Programme also gives the Business School an opportunity to engage with the wider business community and forms a central part of our civic engagement strategy.

This year the projects had a strong digital marketing element and the students ably demonstrated their skills in integrating a wide range of activities including:

Professor Darach Turley discusses practicums with Marie Mooney at DCU Business School Practicum Day 2010.

However, digital marketing was not the only focus. Work on best practice tendering process, brand communications and sales training featured strongly as well as the financial planning skills inherent in any business plan. All groups presented well and confidently fielding difficult and awkward questions at times. It struck me that from a communications perspective, they had all managed to reduce over 10,000 word reports to 25 minute presentations then to 7 minute presentations and then ultimately one page – no mean feat! And at the end of the day, I certainly was satisfied that these students can hit the ground running in the job market with both the theory and practical skills need in today’s economy.

The roll of honour:

Theme 1 – Original Business Plans

Foodies – an educational toy for teaching good nutrition.

The Foodies Team - Deirdre Shanahan, Terence Bowden, Aisling Meleady and Sophie Gavard - at their poster. The group brought their multidisciplanary background to develop a business plan for an educational toy for teaching children good nutritional habits.

The Next Generation Management (NGM) initiative is more than just another module postgraduate students attend while at DCU Business School. Starting with a weeklong Immersion Course, it is our attempt at instilling in our students the management qualities that DCU Business School believe essential for the success of our graduates, the organisations that will employ them, and the communities that they will serve. Our students will enter the jobs market in difficult times. We need to prepare them to be individuals ready for a career in management, who are adaptive and flexible, innovative and both socially responsible and accountable. They need to be ready to make a significant contribution to crafting and delivering organisational purpose in these uncertain times, regardless of geography and to be prepared for both the routine and the novel.

DCU Winners of the Accenture Leaders of Tommorow Competition 2009

The NGM initiative is designed to deliver on this vision. Particular emphasis is placed on reflexive and critical thinking, collaborating with people, creating, sharing and applying knowledge and dealing with complexity. The module is structured around the major personal, organisational and contextual challenges in modern management and and specifically in a post-growth economy. NGM focuses on four key themes:

Personal and career development;

Leadership, teamwork and corporate accountability;

Global and societal awareness;

Research, media and communication.

Over the course of their programme at DCU Business School, students will collate evidence of their NGM experiences and how they have met the NGM requirements. Students attend learning events and participate in activities throughout the year, provide evidence of participation, reflection on learning and where necessary, complete assigned activities or coursework. Many of these will be chronicled in this blog and in the students blog (http://ngmdcu.wordpress.com).

At the core of the initiative is for students to take accountability for their own learning. As such, they can propose events and activities which they feel meet the NGM objectives. Events include:

core lectures and associated readings by DCU heads of group and guest lecturers on current themes and topics;

contribution to the DCU Business School community including organisation of approved events to benefit students, faculty and alumni of DCU Business School and the wider DCU community including members of the immediate vicinity of the university; and,

In the eighties, NIHE/DCU played a critical role in preparing the first generation of professional Irish management for the Celtic Tiger Era. Hopefully, DCU‘s next generation of graduates will be equally successful in delivering the next generation of the Irish economy.

Finally, all the results for another year in DCU Business School are committed and there is a small window of time to reflect on the previous year before the onslaught begins again.

This year ended with presentations on practicums from the MSc in Ecommerce class. The aim of the practicum is to expose the student to some real-world problem in the ecommerce area in order to allow the theoretical work covered in the earlier modules, to be put into practice. The deliverable is often some form of business plan. The choice of content for the practicum is at the discretion of the students but must however be practical in nature and have a technical and entrepreneurial component.

A couple of observations. Firstly, for those educators or learners considering a practicum, the choice of faculty advisor is essential. We use two, a business and a technical advisor. While faculty can often advise students in relation to dissertations or more formal academic research, few have the experience (or interest) in supporting the development of robust and potentially successful business plans. Successful practicums, much like business plans, benefit from robust, honest and merciless challenges by advisors with some subject matter expertise. In e-commerce, this means from both a technical and business perspective. If you can’t tick 2-3 of these four boxes, find a new advisor.

Secondly, the students’ own ideas are often more interesting than company ideas. However, it is easy for students to get bedazzled by the opportunity to work with a leading brand and to subordinate their own ideas due to lack of confidence or the perception of some advantage to be gained through company interaction. While ideas and support from companies are welcome, we don’t, typically, encourage company-driven projects as these often rely on tight company involvement which may not be forthcoming or dominates the project. There is a freedom in developing your own business ideas that rarely is achieved or available in a company-sponsored project. In this way, a sponsored project can be a poisoned chalice.

Thirdly, it takes time and this is an area we could improve upon. 2-3 months is not enough. It seems that an ideal gestation period is 6 months or more. In fact, the most interesting discussions that I have had with students are the second or third iteration of a business idea after robust debate. Unfortunately, this is often after the practicum when deadlines have passed and the tension caused by assessment no longer lurks in the shadows. While such iteration and debate can be frustrating and emotional for all involved, unlike a dissertation, successful practicums need passion. If you can’t get passionate about an idea, why would you expect someone else to?

Fourthly, you need numbers. If your numbers look too good to believe, they probably are. Whether it is market research or financials – at some point in time, the numbers will be weighed and measured, don’t be caught wanting.

Finally, there are enough ideas for everyone. As each student group should have their own projects, each group is only competing against themselves. Students should be encouraged to share their learning and ideas on projects as early as possible. International students may offer insights or market potential that can often be overlooked and often have work experience or are working and so can identify real problems to be solved with with some authority. Insist in the following – no lies, no surprises and if someone is poisoning a group, move them as early as possible. Regarding poisonous team members, look to the causes and not the symptoms – sometimes the “negative” team member is right.

So what about this year’s projects? Two groups pursued projects with IBM on Green Sigma. While well executed, these groups found it hard to bring their project to a higher level without substantial access to IBM personnel and research. Being based on an existing service also provided challenges in terms of originality.

A number of groups looked at the issue of identity fraud and transaction authentication. One group investigated using secure text messaging for credit card transaction authentication whilst another wanted to do away with credit cards altogether and use fingerprint authentication. Whilst the former make an existing process possibly more efficient, the latter seeks to transform – no more plastic so eco-friendly too!

One of my favourite business proposals was SocioFuturePaths – a specialist social media consultancy targetting the travel industry. Their practicum output included an iPhone App for finding tourist sites (including pubs, restaurants etc) and a web service for enhancing transport booking systems using Facebook Connect. As well as developing real applications, there analysis was sound – so called “social media experts” could too often be retitled “self-proclaimed social media experts”. Their sectoral focus and plan based on something that they are immersed on and were passionate about left me with optimism.

While InternationalStudentAdvantage were graphically-challenged, they were the one of the few groups that identified a real customer need, a solution and generated revenues and interested from future customers. Their concept extended the successful student advantage discount site in the US by providing useful information based on key international student events/activities e.g. finding a course, applying, getting English language competence, getting a loan, getting accommodation, getting a bank account – you get the idea. What was also impressed and remarked upon was that the group was a truly international group – they were like the Borg and comprised students from at least three continents.

A number of projects were based on licensing or distributing existing technologies in Ireland for existing or new purposes. The interesting ones included telecare and automated license plate recognition applications. While some of these projects had some intrinsic merit, Ireland is a small market. My main concern was that feasibility often depended on securing “sole and exclusive territorial rights” and success would largely depend on not only being low cost but also different than existing solutions. Businesses based only on device distribution in a country the size of Ireland can provide a good living for one person and are a shortcut to long term debt for four. Notwithstanding this, the ideas do have merit in larger countries with different demographics or for other purposes. With more scrutiny, these ideas may yet be realisable.

Despite these ideas, a question universities need to address is one of IPR and value-add. Few projects progress to commercialisation. This may be for a multitude of reasons – student confidence, the lure of jobs in industry, travel, funding, university support, IP ownership…. In the current economic conditions, this may change. I hope it does.